Information Disclosure: Timing
|Q.1 Do you agree that amending the CCCFA to provide that when purchasing a motor vehicle from a motor vehicle trader (as defined in the Motor Vehicle Sales Act 2003), and accessing credit at the time of the purchase, the borrower must be provided with the disclosure as required by the CCCFA immediately at the time of sale would reduce problems associated with motor vehicle finance?. What advantages or disadvantages do you see the above proposed amendment to the CCCFA provides to consumers and traders?. Are there other options to address the issue?|
Most submissions from consumer representatives such as community law centres or budget advisory services gave full support to amending the CCCFA so that when a consumer purchases a motor vehicle from a motor vehicle trader and accesses credit at the time of the purchase, the consumer is provided with the disclosure as required by the CCCFA immediately at the time of sale.
Benefits of this noted were that immediately borrowers would be given the opportunity to consider the credit contract in full at their leisure and decide if the finance was appropriate for them. Borrowers could even perhaps realise they should shop around for finance given there is a 3 day cooling off period in the CCCFA. This was tempered by the acknowledgement that disclosure documents are often not read by borrowers.
It was suggested by one submitter that the cooling off period be extended to 5 days from 3. An advisory service suggested that all contracts should be subject to the concept of a compulsory ‘walk through' of the documentation with the lender.
Finance companies, while not objecting to the proposal, did not share the same enthusiasm as community-based agencies, noting that borrowers themselves often contributed to the problem when they suffered ‘buyer's remorse' and attempted to use the CCCFA cooling off period as a means of exiting the purchase of the vehicle.
Two banks commented in favour of the proposal. One noted a motor vehicle trader would need to retain a signed copy of the disclosure information to indicate the consumer had received the information.
An industry group representing multiple lenders, suggested the proposals would not fix the issues cited in the discussion document and suggested that its members received few requests to return financed vehicles under the cancellation provisions of the CCCFA. A credit union submission suggested the proposal would not solve the issues discussed in the paper.
A motor vehicle industry group did not support the proposal noting those who wish to read disclosure information already choose to do so. It felt the option could retard the sale process and suggested instead a single, universal document be provided that provides general advice on credit contracts.